BP 2014 Annual Report Download - page 68

 Overseeing the appointment, remuneration, independence and
performance of the external auditor and the integrity of the audit process
as a whole, including the engagement of the external auditor to supply
non-audit services to BP.
 Reviewing the systems in place to enable those who work for BP to
raise concerns about possible improprieties in financial reporting or other
issues and for those matters to be investigated.
Members
Name Membership status
Brendan Nelson
(chairman)
Member since November 2010; chairman since
April 2011
George David Member since February 2008
Phuthuma Nhleko Member since February 2011
Andrew Shilston Member since February 2012
Brendan Nelson is chair of the audit committee. He was formerly vice
chairman of KPMG, and is chairman of the group audit committee of The
Royal Bank of Scotland Group plc, and a member of the Financial Reporting
Council Monitoring Committee. He was president of the Institute of
Chartered Accountants of Scotland in 2013. The board is satisfied that Mr
Nelson is the audit committee member with recent and relevant financial
experience as outlined in the UK Corporate Governance Code. It considers
that the committee as a whole has an appropriate and experienced blend
of commercial, financial and audit expertise to assess the issues it is
required to address. The board also determined that the audit committee
meets the independence criteria provisions of Rule 10A-3 of the US
Securities Exchange Act of 1934 and that Mr Nelson may be regarded as
an audit committee financial expert as defined in Item 16A of Form 20-F.
Meetings are also attended by the chief financial officer, group controller,
chief accounting officer, group auditor (head of group audit) and
representatives of the external auditor, who also meet with the committee
chair on a regular basis outside the meetings.
Activities during the year
Training
The committee received technical updates from the chief accounting
officer on developments in financial reporting and accounting policy.
Externally facilitated learning sessions were held on director responsibilities
for assurance over joint ventures, trends and developments in the use of
third-party agents and developments in global accounting standards.
Financial disclosure
The committee reviewed the quarterly, half-year and annual financial
statements with management, focusing on the integrity and clarity of
disclosure, compliance with relevant legal and financial reporting standards
and the application of accounting policies and judgements.
In conjunction with the SEEAC, the committee examined whether the
BP Annual Report and Form 20-F 2014 was fair, balanced and
understandable and provided the information necessary for shareholders
to assess the group’s performance, business model and strategy. The
committees recommended that the board could make the statement as
set out in the statement of directors’ responsibilities on page 90.
Committee reports
Audit committee
Chairman’s introduction
The work of the audit committee in 2014 remained focused on the
appropriateness of BP’s financial reporting and accounting judgements, the
review of key group-level risks and the rigour of BP’s audit processes,
system of internal control and risk management. A number of key topics
have remained core to the committee’s agenda, including regular
assessment of the group’s financial responsibilities arising from the
Deepwater Horizon accident and judgement on whether the group has
maintained significant influence over Rosneft.
Outside these core areas, the committee undertook detailed reviews of key
areas of BP’s business, most notably in trading where the committee visited
the trading floors in London and Chicago. This allowed the committee to see
the role trading plays in the group’s broader business and its system of
governance, control, risk and compliance. Over the year, formal business of
the committee was supplemented by private meetings with key
constituents. These include BP’s group audit function, the group ethics and
compliance officer and the external auditor. I believe the background and
experience of the committee’s members, together with the ability to
discuss issues directly with management, has led to an effective
performance from the committee over the year.
Brendan Nelson
Committee chair
Role of the committee
The committee monitors the effectiveness of the group’s financial
reporting and systems of internal control and risk management.
Key responsibilities
 Monitoring and obtaining assurance that the management or mitigation
of financial risks are appropriately addressed by the group chief
executive and that the system of internal control is designed and
implemented effectively in support of the limits imposed by the board
(‘executive limitations’) as set out in the BP board governance principles.
 Reviewing financial statements and other financial disclosures and
monitoring compliance with relevant legal and listing requirements.
 Reviewing the effectiveness of the group audit function and BP’s
internal financial controls and systems of internal control and risk
management.
BP Annual Report and Form 20-F 201464